IMF Approves Renewal of Agreement with Nicaragua

The extension allows the immediate disbursement of $ 20 million.

Monday, November 22, 2010

The Executive Board of the International Monetary Fund (IMF) today completed the fourth and fifth review of economic developments in Nicaragua under the Credit Facility Extended (SCA) and agreed to extend the agreement until December 4th, 2011.

The extension involves a reprogramming of disbursements as provided in the agreement. The conclusion of the reviews enables the immediate disbursement of $ 19.97 million, while the remainder will be disbursed in two equal tranches of approximately $ 8.66 million in 2011. To date we have made disbursements totaling SDR 54.1 million (approximately U.S. $ 84.41 million).

All performance criteria has been me, except the concessions limit which was not achieved due to technical reasons and for which the Executive Board approved a waiver. Nicaragua has made considerable progress in the implementation of the supplementary agenda.

"The Nicaraguan economy is gradually recovering from the effects of global financial crisis. The rebound in activity in 2010 was broad and balanced, exports are rising more quickly than expected and financial systems have maintained their stability and liquidity. It is expected that GDP growth will reach 3% this year.

"The banking system remains strong, but the uncertainty surrounding the economic outlook calls for further strengthening and supervision. The implementation of recommendations in the Sector Assessment Program (FSAP) is to be a key priority, as well as the adoption of stricter regulations for the microfinance sector and cooperatives."

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Nicaragua and IMF Agree to Extend Economic Program

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The country and the IMF agreed to extend the three-year financial and economic program signed in October 2007 for two more months.

By signing the letter of intent (which must be ratified by the board of the International Monetary Fund-IMF), the economic program will conclude this next December and not on October 4th, as originally planned.

Nicaragua Concludes IMF Negotiation

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The country expects to signs a Letter of Intent related to the technical extension of the IMF's Extended Credit Facility.

Antenor Rosales, President of Nicaragua's Central Bank, added that in this week's negotiations they have discussed two letters of intent.

"The first is related to the fourth and fifth revision of the economic program and its enlargement for 2011, while the other is about a discussed two-month extension, which could be signed today", reported El Nuevo Diario on its website.

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